The Securities and Exchange Commission has charged a Russian national operating out of Florida with selling $26 million of nonexistent certificates of deposits to unsuspecting older investors, according to charges filed by the Securities and Exchange Commission.
The SEC charged the operator, Denis Georgiyevich Sotnikov of Hallandale Beach, Fla., and Florida-based entities he controlled, for allegedly participating in the fictitious CD scheme since 2014.
"Investors were swindled out of millions of dollars through a web of fake websites and concealed identities,” said SEC Enforcement Division Co-Director Steven Peikin.
Since November 2014, the alleged scheme involved spoofing the websites of at least 24 actual financial firms, resulting in over $26 million in known investor losses – with many of those losses from older investors who used their retirement savings, the SEC said.
The scam involved purchasing internet ads that targeted investors who were searching for CDs with high rates. The ads allegedly included links to phony websites, which mimicked legitimate institutions and falsely claimed that the firms offering the CDs were members of Finra and the FDIC, and that deposits were FDIC-insured.
When investors called the phone number on the websites, an “account executive” impersonating a registered representative directed investors to wire funds to so-called “clearing” partners. These alleged clearing partners were entities Sotnikov used to launder and misappropriate investor funds, the SEC said.
In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced related criminal charges and are pursuing asset seizures.
The SEC’s complaint was filed in federal court in the District of New Jersey and charges Sotnikov, Adaptive Technology LLC, AGQ Business Group LLC, ATL Business Group LLC, BO&SA Corp., DN Industrial LLC, and Expert Digital LLC with violating the antifraud provisions of the federal securities laws.
Sotnikov is also charged with aiding and abetting these violations.
The SEC is seeking permanent injunctive relief and the return of allegedly ill-gotten gains with prejudgment interest and penalties. The complaint also names Sotnikov’s wife Natalia Mazitova, as well as Great Imperial LLC, HRC Clearing House LLC, and Inteko Cargo LLC, as relief defendants.